Liz Truss is under fire for suggesting there would be no “handouts” for struggling families – while former Prime Minister Gordon Brown has called for an emergency budget
Their economic response to the crisis has become the main battleground in the race to replace Boris Johnson as the two Tory leadership candidates clashed over their conflicting financial plans for the country.
Many of her fellow politicians have raised concerns about the next Prime Minister’s approach to this crisis, with former Labor Prime Minister Gordon Brown calling for an emergency budget before a “financial time bomb” hits the UK in the autumn.
The foreign minister, in particular, has recently come under fire after claiming she would not hand out “handouts” to solve the country’s economic crisis.
So what did Ms Truss and Mr Sunak say about the cost of living crisis, who criticized them and what did Mr Brown call for?
What did Liz Truss say?
The South West Norfolk MP told the Financial Times that she would “assess what else can be done” in the face of warnings from the Bank of England that the UK could face the longest recession since the 2008 financial crisis.
But the foreign secretary then added: “I would take a conservative approach by lowering the tax burden and not handing out handouts.”
Penny Mordaunt was quick to defend the Tory leadership favorite and told Sky News the comments had been misinterpreted.
The trade secretary, who was kicked out of the leadership contest at the final stage of MPs’ voting, said: “It’s not as if she’s ruling out any future aid.
“What she’s looking at, however, is enabling people to keep more of the money they make.”
She continued, “There’s no point in taking money from people and then giving it back in a very, very complicated way.
“We need to simplify this and make sure that households are as resilient as possible, and stopping large sums of tax collection from people is one way to do that.”
What was Rishi Sunak’s answer?
Mr Sunak was quick to condemn Ms Truss’ recent remarks, arguing it would be “simply wrong to rule out further direct support” for struggling families this winter.
Meanwhile, the former chancellor’s allies have criticized his rival for another U-turn.
Former Chief Whip Mark Harper tweeted: “Stop blaming journalists (again) – reporting what you actually say will not be ‘misinterpreted’.”
He continued his criticism by saying this is the second time in five days that Ms Truss has retracted her comments, writing that “something like this happened under the current [Prime Minister] and tremendously damaged faith in all of us.”
The Tory MP concluded: “Then what does ‘no handouts’ mean?”
It comes after Ms Truss previously pledged to end national pay deals and cut public sector salaries for workers outside the south-east of England – and scrapped the plan just 12 hours later.
What else was said about tax cuts?
Supporters of Mr Sunak have also criticized Ms Truss’ plans to reverse the increase in Social Security rates that the Richmond MP introduced when he was chancellor.
Ms Truss wrote in the Sunday Telegraph: “I would use (an emergency budget) to address the cost of living crisis immediately by cutting taxes, reversing the increase in Social Security and suspending the environmental tax on energy bills.”
Former Culture Secretary Oliver Dowden, who supports Mr Sunak, said the foreign secretary’s proposed tax cuts were “insufficient” to help low-income workers and would disproportionately benefit the better off.
He told BBC News: “You’re going to see energy bills going up to almost £4,000 and if you look at the idea of the tax cuts, this idea of reversing social security contributions, that’s only going to benefit someone who works full-time on the national living wage by less than £60.
“Whoever the prime minister is, by contrast, they receive a benefit of around £1,800,” he continued. “So that’s not the way to help people at this very difficult time.”
Tory MP Damian Hinds, who is a supporter of Mr Sunak, said the former Chancellor will go beyond the extra £1,200 he originally offered to society’s poorest.
Acknowledging that the existing package was not enough in these “extraordinarily difficult times”, he told Sky News: “Things have gotten worse even since it was introduced in terms of energy bill projections… and [Mr Sunak has] It was clear that more might be needed and he is willing to do so if needed.”
Sunak criticized local financing and the tax turnaround
Mr Sunak recently came under fire after a video was released by New Statesman magazine on July 29 showing the former Chancellor addressing Conservative Party members in Tunbridge Wells.
Mr Sunak told the audience: “I have managed to change the funding formulas to ensure areas like this get the funding they deserve because we have inherited a set of formulas from the Labor Party that put all funding in deprived urban areas.”
The city is considered a relatively prosperous area in south-east England.
The Tory leader continued: “I’ve started work to undo that.”
Mr Sunak was recently accused by critics of “flipping taxes” after he promised to scrap VAT on all domestic energy bills for next year when he becomes prime minister, which would save the average household £160.
The former chancellor had previously positioned himself as a fiscally conservative lead candidate, condemning Ms Truss’ promises of unfunded tax cuts as “comforting fairy tales”.
Business secretary Kwasi Kwarteng, an ally of Ms Truss, claimed Mr Sunak’s about-face was only because he was under pressure in the prime ministerial race, as polls showed the foreign secretary was the party members’ favourite.
He told Times Radio, “There comes a time in election campaigns when people are under a lot of pressure – he clearly felt under a lot of pressure in the debate and wanted to come out on top and interrupt Liz.”
What did Gordon Brown say?
The former Labor prime minister has urged both candidates to agree an emergency budget with Boris Johnson and urged the next UK prime minister to increase support for vulnerable households.
Mr Brown commissioned a report which found that government support for low-income households has not been able to offset the losses they are facing, with some families being up to £1,600 a year worse off.
He said that unless more support is provided, the government risks “dooming millions of vulnerable and innocent children and pensioners to a winter of abject poverty”.
He continued in Sunday’s Observer: “The reality is grim and undeniable: A financial time bomb will explode for families in October when a second round of fuel price hikes in six months’ time sends shockwaves through every household and sidelines millions.”
The former Prime Minister bemoaned the “vacuum” at the heart of government which he says has been created by the Prime Minister’s and Chancellor’s furloughs and the Tory leadership’s election campaign candidates.
He told BBC Radio 4’s The World This Weekend that not enough is being done to “address a moment where a lot of the achievements of the last 30 or 40 years have been lost”.
Mr Brown’s report also found that the extra £1,200 being offered to the poorest in society this year cannot offset the three severe falls in their income from October 2021 to October 2022.
What happens next?
Ms Truss and Mr Sunak will continue to attend nationwide husting events in the coming weeks in a bid to win support from Tory members before voting closes in September.
The result – and the new British Prime Minister – is due to be announced on September 5.